Rishi Sunak is being urged to cut VAT and bring in a jobs guarantee for young people as part of the next steps in the UK’s economic recovery from Covid-19.
Nicola Sturgeon also restated her plea for the Chancellor to boost the Scottish Government’s borrowing powers when he delivers an economic update to MPs on Wednesday.
With the Scottish Government already considering if a job guarantee can be introduced for those aged 16 to 25, Mr Sunak was urged to follow its example.
The First Minister added that the Chancellor should also consider cutting VAT, particularly for the tourism and hospitality sectors which struggled badly with lockdown.
Her comments come ahead of Mr Sunak’s statement to the House of Commons – with Ms Sturgeon insisting an economic stimulus package worth a total of £80 billion was needed.
Speaking at her daily briefing, Ms Sturgeon said: “We believe that the UK’s programme should tackle inequality, support jobs and have a strong focus on investment in low-carbon and digital infrastructure.
“We’ve also recommended an employment guarantee for young people, a policy the Scottish Government is looking at ourselves, and we’ve called for a temporary cut in VAT to boost consumption, with especially low rates for our hospitality and tourism sectors.
“Finally, we have proposed Scotland should have greater financial powers, for example over borrowing, so we can play our own part in and shape our own response to the economic implications of the pandemic.”
The First Minister insisted the policies to be put forward on Wednesday “must meet the scale of the economic challenges that the UK faces”.
The Scottish Retail Consortium (SRC) backed calls for a cut in VAT rates, with policy head Ewan MacDonald-Russell saying this could “spark the economy, giving consumers an immediate incentive to shop”.
The SRC is also urging the Chancellor to consider measures such as making direct cash payments to lower income households to boost economic activity, or reducing income tax via a targeted scheme, which could be adapted by Holyrood ministers.
It also wants a one-year moratorium on new public policy initiatives not related to coronavirus, and a delay on implementing existing measures, so that retailers can focus on restructuring their business to cope with measures such as physical distancing.
Mr MacDonald-Russell said: “The UK and Scottish Governments have taken extraordinary steps to protect the retail industry during the coronavirus crisis. Rates relief, grants, loans, and the furlough scheme have supported businesses and jobs whilst businesses have been in hibernation.
“However, as the lockdown restrictions relax, there is an urgent need to encourage people to go out and visit high streets and jump-start the economy. That’s why we have called for temporary measures to boost spending.
“A short-life VAT reduction could spark the economy, giving consumers an immediate incentive to shop, confident that every purchase made supports jobs in retail and throughout the supply chain.”
He also stressed the Chancellor must be “realistic in the burdens businesses can bear right now”, adding that Covid-19 had put “unprecedented pressure on retailers, an industry already under immense strain from changing consumer behaviour and high public-policy costs”.
And he urged: “Until the crisis has passed, ministers at Westminster and Holyrood need to keep down the cost of business and give shops space to recover.”